Burberry: jobs lost as management and IT make further savings

Luxury brand saw sales rise in December and plans to squeeze more from IT systems

By CIO UK Staff

January 20, 2009

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Stalwarts of British fashion Burberry has today announced job cuts in its manufacturing division and raised the savings targets which senior managers and IT must achieve. The luxury brand also reported a nine per cent rise in revenues in December as the cut in VAT may have increased sales.

Burberry reported that in the third quarter it achieved a sales rise of 30 per cent, earning the trench coat maker £329 million, a nine per cent increase in revenues for the quarter ending in December 2008. Retail revenue rose by 12 per cent, wholesale by eight per cent; led by double digit growth in Asia and Europe, although Spain and US were weak.

“There was an improved retail performance in December,” said Angela Ahrendts, chief executive officer of Burberry.

Burberry told its investors today that it will make an additional £30 to £35m in savings through the restructuring of its manufacturing and Spanish divisions. “These are enabled in part by the investments we have previously made in supply chain, IT and infrastructure,” Ahrendts said of the new savings targets. The improvements in the last quarter were in part put down to the improvements Burberry has made to its supply chain, which meant that deliveries were early for the critical Christmas period.

Burberry has been implementing SAP enterprise resource planning systems as part of an IT standardisation plan that in June the company said had delivered £20m in savings.

Despite the efficiencies achieved this year Burberry announced that globally it will be cutting 540 jobs, 290 manufacturing positions in the UK and 250 with the closure of its Spanish division. The manufacturing jobs are due to the consolidation of its two Yorkshire factories, with the Rotherham sewing factory closing and the company focussing its efforts on the Castleford plant.